Witness in Percoco trial resumes cross examination following arrest

Joseph Percoco, Gov. Andrew Cuomo's former top aide and close friend, is on trial in Manhattan, accused of accepting more than $315,000 in bribes. Here are the key players in his trial.
Jon Campbell / Albany Bureau

Peter Galbraith Kelly is a co-defendant in the case against Joseph Percoco, Gov. Andrew Cuomo's former top aide and confidant.(Photo11: Government exhibit)

The beleaguered star witness in the federal corruption trial of a close aide to Gov. Andrew Cuomo suggested he hadn't tried to defraud a credit card company when he denied staying for a night at the Waldorf Astoria.

That apparent deceit led Todd Howe to be incarcerated over the weekend for violating his cooperation agreement in the midst of his testimony against Joseph Percoco and three upstate executives.

But when he returned to the stand Tuesday he was confronted with another deception that may have escaped the notice of the government: A 2016 application for a $1.4 million home refinance on which he falsely claimed he was a partner of an Albany law firm.

Howe acknowledged that it will be an uphill battle now for him to get prosecutors to seek leniency for the bribery and embezzlement that forced him to cooperate, crimes that could land him in prison for up to 130 years.

Percoco, of South Salem, is accused of receiving more than $300,000 with Howe's help from Competitive Power Ventures and Cor Development in exchange for helping the companies in their dealings with the state.

Kelly, a former CPV official, is accused of steering nearly $290,000 to Percoco's wife for a "low-show" job so the governor's aide would help the company win agreements from the state for its power plants in New York and New Jersey.

Cor Development's Steven Aiello and Joseph Gerardi are accused of passing $35,000 to Percoco through Howe for help with the company's redevelopment of Syracuse's Inner Harbor and for a raise for Aiello's son, who worked for the governor.

Howe pleaded guilty to bank fraud in 2010; he then spent more than six years diverting hundreds of thousands of dollars in client payments to his Albany law firm to a secret firm account he had set up for his own personal use; and he faced years of court judgments and wage garnishments for his failure to repay loans and mortgages or cover even routine expenses.

He has pleaded guilty to eight felonies connected to the bribery scheme, his embezzlement from his firm and his failure to pay taxes on the stolen money.

His appearance Tuesday may have been the most anticipated fifth day of testimony for any cooperating witness in federal court. But first it was delayed a day and a half because Gitner had the flu. And then U.S. District Judge Valerie Caproni allowed prosecutors to call a witness out of turn, an FBI special agent who could only testify Tuesday.

The agent, Erin Zacher, detailed an interview Percoco had with her and prosecutors as part of an unrelated investigation in September 2014.

At the time Percoco was on leave from Cuomo's office and running the governor's re-election campaign. She said that Percoco described his role on the governor's staff as "the guy with the hammer", the one who had to have the "tough conversations" with people that others did not want to have.

She testified that Percoco told her he did not use his personal email account to conduct state business because he feared the emails could then be subject to Freedom of Information requests and used as discovery in court cases.

Jurors for the past two weeks have seen how Percoco repeatedly used his personal email to communicate about matters relating to the companies' business with the state.

Caproni rejected the prosecution's request that she instruct jurors simply that Howe had been incarcerated because his bail was revoked. Instead she allowed the defense to let jurors learn what had transpired through cross examination.

Gitner wasted no time, asking Howe if FBI agents had taken him into custody in his hotel room Thursday night. He asked if he knew why that was done.

"I believe the government believed that I had possibly tried to defraud my credit card company and I didn't inform them of that," Howe said.

Earlier Thursday, Gitner had confronted Howe about his stay at the Waldorf Astoria and his request that the charge be dropped months later because he had not stayed there.

But on Tuesday, Howe insisted he had made the claim because he was uncertain the charge was correct. He said he had to come to New York multiple times that year, including when his daughter needed emergency surgery.

"My intent was not to defraud the credit company," he said. "I was disputing it. I wasn't denying it."

Gitner soon confronted him with the application to refinance his mortgage, just months before he would negotiate the cooperation deal with prosecutors.

Howe acknowledged that the application listed him as a partner for the Albany law firm of Whiteman Osterman & Hanna, which he wasn't any longer, but he suggested that was because the same information was filled out as had been for the original mortgage the year before.

Gitner has suggested that Kelly became close friends with Percoco and gave Percoco's wife a job as a favor for a friend, with no expectation he take official action for his company in the governor's office.

While prosecutors have acknowledged Howe's baggage from the outset, they have evidence that they argue corroborates Howe's testimony on the bribery schemes so his lies and arrest aren't necessarily fatal to their case.

But the legal community was hard pressed to find a similar example of a cooperating witness getting arrested while still on the stand.

Anthony Siano, a White Plains criminal defense lawyer and former federal prosecutor, said he was initially stunned by the revelations late last week. But he also realized nothing should be surprising when it comes to prosecution witnesses trying to avoid lengthy prison terms.

Siano knows from unsavory cooperators, having used them and attacked them on the witness stand. He grilled a Westchester lawyer and political fixer, Anthony Mangone, in the federal corruption trial of Yonkers Councilwoman Sandy Annabi and Siano's client, former Yonkers GOP chairman Zehy Jereis.

Siano even thought he had a similar breakthrough as Howe's Waldorf-Astoria admission when he was able to reveal that the day Mangone claimed to have gotten bribe money from a Yonkers developer to pass along to Jereis the developer was actually out of the country.

Still, Jereis and Annabi were both convicted and sent to prison.

Howe's arrest showed just how aggravated prosecutors must have become with him. But Siano suspected it was also to send a message to the jury.

"It was a calculated attempt by prosecutors to show that (a cooperation agreement) has teeth," Siano said. "It's not just a Get out of Jail Free card."

Gitner said he expects his cross of Howe to last until Wednesday afternoon and lawyers for Aiello and Gerardi expect to spend about five hours questioning Howe. That should be followed sometime Thursday by a redirect in which prosecutors do what they can to rehabilitate their star witness in the eyes of jurors.